Investment Project Analysis: Gaser Ossido Duro Company (Finance)

This project analyzes two mutually exclusive investment projects, the PVD Project and the Chemical Nickel Project, for the Gaser Ossido Duro Company. The analysis focuses on relevant cash flows over a 10-year period, considering both inflows and outflows. The PVD Project has an IRR of 6.04% and the Chemical Nickel Project has an IRR of 85.10%. The analysis also includes the value of property associated with the investment. The Chemical Nickel project is deemed a better investment opportunity due to higher NPV and IRR. Revenue analysis suggests strategies to optimize costs and maximize revenue. The project provides a comprehensive financial evaluation of the investment opportunities, offering insights into the potential returns and risks associated with each project. This analysis helps in making informed investment decisions by evaluating the financial viability of the projects.

Running head: INVESTMENT PROJECT ANALYSIS
Investment Project Analysis
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1INVESTMENT PROJECT ANALYSIS
Table of Contents
Project Investment Analysis............................................................................................................2
References........................................................................................................................................6

2INVESTMENT PROJECT ANALYSIS
Project Investment Analysis
The investment project analysis has been done for the Gaser Ossido Duro Company that
is deciding upon the valuation of two mutually exclusive projects which would be considered for
investment and evaluation purpose. The analysis of the two mutually exclusive project that is
PVD Project and Chemical Nickel Project would be done by analysing the relevant cash flows
that would be flowing to the project based on the cash flow analysis done whereby relevant
sources of cash inflows and outflows have been taken into consideration. The life of the project
has been around 10-Years and the same would be done for the purpose of consideration of
investment.
PVD Project: The project investment would be generating around 125,950 and the IRR for the
project is expected to be around 6.04%. The cannibalization effect has not been taken into

3INVESTMENT PROJECT ANALYSIS
consideration whereby the loss of sales which is around 1% of 2.5 Million to the company1. It is
important to note that as depreciation has been considered as a non-cash expense in both the
projects, the same has been accounted for taxation purpose by reading the same after the net
profit amount. The total investment that the company would be doing in this project would be
around 500,000 in the first year and then later after five years of time the company will be
spending an additional amount of 25,000.
Chemical Nickel Project: The project investment would be generating around 434,284 and the
IRR for the project is expected to be around 85.10%. The cannibalization effect has not been
taken into consideration whereby the loss of sales which is around 2% of 2.5 Million for
considering the net cash flows to the company2. The total investment that will be involved in the
project will be around 400,000 whereby the sum of 200,000 will be invested in the first year and
the rest of 200,000 will be invested in the fifth year of the project.
1 Bondarenko, Svitlana, et al. "Application of project analysis software in project management in the pre-investment
phase." Journal of Mechanical Engineering and Technology 9.13 (2018): 676-684.
2 Florio, Massimo, Valentina Morretta, and Witold Willak. "Cost-Benefit Analysis and European Union Cohesion
Policy: Economic Versus Financial Returns in Investment Project Appraisal." Journal of Benefit-Cost Analysis 9.1
(2018): 147-180.

4INVESTMENT PROJECT ANALYSIS
The Chemical Nickel project would be creating a better investment opportunity for the
shareholders or the capital providers as the same would be creating a higher amount of wealth
from the project in the trend period that has been evaluated. Both the NPV and IRR criteria has
been well meet in the vase of Chemical Nickel Project as the underlying profit base is
comparatively higher in the case of Chemical Nickel Project.
Value of Property
The value of property where the investment is considered is valued at 1,860,000 for
which the company is getting 2,000,000 after a two years of time will be taken into consideration
for analysis purpose. The growth rate embedded in this two years of time period has been around
3.70% which has been well applied in order to get the value of property after a sum of 10 years.
The value derived for the property has been well done with the help of applicable growth rate
whereby the future value of property will be around 2,876,000 representing an excess amount of
around 876,190 and the associated maintenance cost for the property will be around 100,000.
Thus after deducting the maintenance cost the final net cash flow for the company has been
around 776,190.
Particulars Amt ($)
Current Value of Property 1,860,000
Offered Value of Property 2,000,000
Growth Rate 3.70%
Value of Property After 10 Years
Current Offered Value at Year 2002 2,000,000
Growth Rate 3.70%
Expected Value After 10 Years 2,876,190
Excess Value (Inflow -Outflow) 876,190
Less: Maintenance Cost of Property 100,000
Net Cash Flows 776,190

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PVD Revenue Analysis
In order to well increase the revenue base or bring the revenue of the company well in
line with the other project base the company should use better technology help for reducing the
costs of operations and apply various management strategies for increasing the revenue base in
the trend period analysed. The key aim should not only be reducing the cost through optimum
utilisation but should also aim for revenue maximisation.

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References
Bondarenko, Svitlana, et al. "Application of project analysis software in project management in
the pre-investment phase." Journal of Mechanical Engineering and Technology 9.13 (2018):
676-684.
Florio, Massimo, Valentina Morretta, and Witold Willak. "Cost-Benefit Analysis and European
Union Cohesion Policy: Economic Versus Financial Returns in Investment Project
Appraisal." Journal of Benefit-Cost Analysis 9.1 (2018): 147-180.
Kalinichenko, Antonina, Valery Havrysh, and Vasyl Perebyynis. "Sensitivity analysis in
investment project of biogas plant." (2017).
Tang, Bao-Jun, et al. "Investment opportunity in China's overseas oil project: An empirical
analysis based on real option approach." Energy Policy 105 (2017): 17-26.